A California residential purchase escrow is open and all buyer contingencies have been removed. The buyer now wishes to cancel the transaction. Under California escrow law, what is the correct procedure for the escrow company to cancel escrow and release the buyer's deposit?
Correct Answer
D) The escrow company requires mutual written cancellation instructions signed by both buyer and seller before releasing any funds
Under California escrow law and the terms of the California Residential Purchase Agreement (C.A.R. Form RPA), an escrow is a neutral depository and cannot release funds based on one party's instructions alone. Once all contingencies have been removed, neither party has a unilateral contractual right to cancel. The escrow company requires mutual written cancellation instructions — signed by both buyer and seller — before disbursing any funds. If the parties cannot agree, the funds remain in escrow until the dispute is resolved by mutual agreement, mediation, arbitration, or court order.
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A non-U.S. resident is selling a California investment property for $900,000. The buyer does not intend to use the property as a personal residence. Under FIRPTA, what is the federal withholding amount the buyer must remit to the IRS?
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